<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO.)
Filed by the registrant / /
Filed by a party other than the registrant /X/
Check the appropriate box:
/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
USFreightways Corporation
(Name of Registrant as Specified in Its Charter)
USFreightways Corporation
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ No Fee Required.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
USFreightways Corporation
(4) Date filed:
March 25, 1998
<PAGE> 2
USFREIGHTWAYS CORPORATION LOGO
USFREIGHTWAYS CORPORATION
9700 HIGGINS ROAD, SUITE 570
ROSEMONT, ILLINOIS 60018
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 1, 1998
To the Stockholders of USFreightways Corporation:
The 1998 Annual Meeting of Stockholders of USFreightways Corporation, a
Delaware corporation (the "Company"), will be held in the Regency Ballroom at
The Rosewood Restaurant, 9421 W. Higgins Road, Rosemont, Illinois 60018, on May
1, 1998 at 10:00 A.M. for the following purposes, as more fully described in the
accompanying Proxy Statement:
1. To elect three directors to serve a term of 3 years or until their
respective successors are elected and qualified; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record of the Company's Common Stock, par value $0.01 per
share, at the close of business on March 10, 1998, the record date fixed by the
Board of Directors, are entitled to notice of, and to vote at, the meeting, as
more fully described in the Proxy Statement.
The Company's Annual Report to Stockholders is being mailed concurrently
with this Notice and Proxy Statement to all stockholders of record. The
Company's Annual Report on Form 10-K for the fiscal year ended January 3, 1998,
as filed with the Securities and Exchange Commission, may be obtained by any
stockholder upon written request to the Secretary of the Company at the address
set forth above.
All stockholders are cordially invited to attend the meeting. Those who
cannot attend are urged to sign, date and otherwise complete the enclosed proxy
and return it promptly in the envelope provided. Any stockholder giving a proxy
has the right to revoke it at any time before it is voted.
By order of the Board of Directors
RICHARD C. PAGANO
Secretary
Rosemont, Illinois
March 25, 1998
<PAGE> 3
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THIS PAGE
INTENTIONALLY
LEFT BLANK
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<PAGE> 4
USFREIGHTWAYS CORPORATION
9700 HIGGINS ROAD, SUITE 570
ROSEMONT, ILLINOIS 60018
PROXY STATEMENT
-------------------------
Approximate date proxy material
first sent to stockholders:
March 25, 1998
-------------------------
The following information is provided in connection with the solicitation
of proxies for the Annual Meeting of Stockholders of USFreightways Corporation,
a Delaware corporation (the "Company"), to be held on May 1, 1998, and
adjournments thereof (the "Meeting"), for the purposes stated in the Notice of
Annual Meeting of Stockholders preceding this Proxy Statement.
GENERAL INFORMATION
SOLICITATION OF PROXIES
A form of proxy is being furnished herewith by the Company to each
stockholder and, in each case, such proxy is solicited on behalf of the Board of
Directors of the Company for use at the Meeting. The entire cost of soliciting
these proxies will be borne by the Company. Solicitation will be made by mail,
and may also be made by telephone, telegraph or facsimile transmission by
directors, officers and regular employees of the Company, but these persons will
not be separately compensated for such solicitation services. The Company may
pay persons holding shares in their names or the names of their nominees for the
benefit of others, such as brokerage firms, banks, depositories and other
fiduciaries, for costs incurred in forwarding proxy solicitation material to
their principals.
AUTHORITY CONFERRED BY PROXIES
Each proxy duly executed and returned by stockholders and received by the
Company before the Meeting will be voted FOR the election of each of the three
nominee directors specified herein unless a contrary choice is specified in the
proxy. Where a contrary specification is indicated as provided in the proxy, the
shares represented by the proxy will be voted in accordance with the
specification made. As to other matters, if any, to be voted upon at the
Meeting, the persons designated as proxies in the accompanying form of proxy
will take such action as they, in their discretion, may deem advisable. The
persons named as proxies were selected by the Board of Directors and each of
them is a director or an officer of the Company.
REVOCABILITY OF PROXIES
Execution of the enclosed proxy will not affect your right as a stockholder
to attend the Meeting and to vote in person. Any stockholder giving a proxy has
the right to revoke it at any time by: (i) a later dated proxy, duly executed
and delivered or presented at the Meeting; (ii) a written revocation sent to and
received by the Secretary of the Company prior to the Meeting; or (iii)
attendance at the Meeting and voting in person.
VOTING SECURITIES AND RECORD DATE
The Company's voting securities currently issued and outstanding consist of
one class of Common Stock, par value $0.01 per share (the "Common Stock"). The
Company has outstanding 26,128,852 shares of Common Stock as of the close of
business on March 10, 1998 (the "Record Date"). Only stockholders of record on
the books of the Company at the close of business on the Record Date will be
entitled to vote at the Meeting. Each share of Common Stock is entitled to one
vote. Representation at the Meeting by the holders of a majority of the shares
of Common Stock outstanding on the Record Date, either by personal attendance
1
<PAGE> 5
or by proxy, will constitute a quorum. Abstentions and broker non-votes are
counted for purposes of determining the presence or absence of a quorum for the
transaction of business. Abstentions are counted in tabulations of the votes
cast on proposals presented to stockholders, whereas broker non-votes are not
counted for purposes of determining whether a proposal has been approved.
SECURITY OWNERSHIP OF PRINCIPAL HOLDERS AND MANAGEMENT
The following table sets forth information as of December 31, 1997, with
respect to the beneficial ownership of the Company's outstanding Common Stock by
each stockholder known to the best of the Company's knowledge and belief to be
the beneficial owner of more than 5% of its Common Stock, each director, nominee
and named executive officer and all the directors and named executive officers
as a group. Except as otherwise indicated, the persons named in the table below
have sole voting and investment power with respect to shares beneficially owned
by them.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
------------------- ------------ ----------
<S> <C> <C>
Fidelity Management & Research Company
82 Devonshire Street
Boston, MA 02109.......................................... 2,837,000 10.89
J. Campbell Carruth......................................... 80,642(2,3) *
James G. Connelly III....................................... 0 *
Robert V. Delaney........................................... 15,150 *
Christopher L. Ellis........................................ 55,692(2,3,4, *
5)
Robert V. Fasso............................................. 28,507(3,4) *
Morley Koffman.............................................. 25,900 *
Robert P. Neuschel.......................................... 20,150(5) *
Anthony J. Paoni............................................ 0 *
John W. Puth................................................ 16,150 *
Neil A. Springer............................................ 17,150 *
William N. Weaver, Jr....................................... 12,250 *
All directors and executive officers as a group (11
persons).................................................. 271,591 1
</TABLE>
- ---------------
* Less than 1%.
(1) Includes options to acquire the following shares which could be exercisable
within 60 days of December 31, 1997 as follows: Mr. Carruth, 60,000 shares;
Mr. Connelly, 0 shares; Mr. Delaney, 14,650 shares; Mr. Koffman, 14,650
shares; Mr. Puth, 14,650 shares; Mr. Neuschel, 14,650 shares; Mr. Springer,
14,650 shares; Mr. Weaver, 10,250 shares; Mr. Paoni, 0 shares; Mr. Fasso,
25,000 shares and Mr. Ellis, 45,000 shares.
(2) Includes shares held by the trustee of the USF Employees' 401K Retirement
Plan for the benefit of each individual as follows: Mr. Carruth, 614 shares
and Mr. Ellis, 654 shares.
(3) Includes shares held by the agent of the USF Employees' Stock Purchase Plan
as follows: Mr. Carruth, 5,794 shares, Mr. Fasso, 506 shares and Mr. Ellis,
3,088 shares.
(4) Includes 2,250 restricted shares each for Messrs. Fasso and Ellis.
(5) Includes 150 and 2,500 shares owned by the spouses of Mr. Ellis and Mr.
Neuschel, respectively.
2
<PAGE> 6
ELECTION OF DIRECTORS
The Company has adopted By-Laws that provide that the Board of Directors
shall consist of not less than three and not more than twenty-one directors,
with the exact number to be determined from time to time by the Board of
Directors, and that the Board of Directors shall be divided into three classes,
equal in number to the extent possible, and, if not all classes can be equal in
number, that the Board of Directors shall decide which class is to have the
unequal number.
The Board of Directors has set the current number of directors at nine,
and, as required by the By-Laws, divided into three classes with each class
serving a three year term.
Unless authority to do so is withheld as provided in the proxy, the proxies
solicited by and on behalf of the Board of Directors will be voted FOR the
election of Messrs. J. Campbell Carruth, Neil A. Springer and William N. Weaver,
Jr. to serve a three year term, all of whom have been nominated by the Board of
Directors to fill the position of those directors whose term expires as of the
sixth annual meeting of the Company. If for any reason one or all of the
nominees should be unable to serve or refuse to serve as a director (an event
which is not anticipated), the persons named as proxies will vote for another
candidate or candidates nominated by the Board of Directors, and discretionary
authority to cast such votes is included in the proxy. The nominees receiving
the highest number of votes of shares of Common Stock, up to the number of
directors to be elected, shall be elected.
NOMINEES AND OTHER MEMBERS OF THE BOARD
The Board of Directors has nominated for election the following three
individuals to serve a three year term:
J. CAMPBELL CARRUTH, age 67, was appointed as the Company's Chief Executive
Officer and President in June 1991 and has been a director of the Company since
December 1991. He was elected Chairman of the Board in January 1998.
NEIL A. SPRINGER, age 59, has been a director of the Company since December
1991. He has been Managing Director of Springer Souder & Associates since June
1994. He was Senior Vice President of Slayton International Inc. from September
1992 to May 1994. Mr. Springer is a director of Idex Corporation and Dorsey
Trailers, Inc.
WILLIAM N. WEAVER, JR., age 63, has been the Company's Assistant Secretary
since March 1992. Mr. Weaver is a member of the law firm of Sachnoff & Weaver,
Ltd., an Illinois professional corporation, which is outside counsel to the
Company. Mr. Weaver has practiced law in the State of Illinois since 1964 and
serves as a director of System Software Associates, Inc. as well as several
privately-held corporations. He holds an A. B. degree from Oberlin College and a
J. D. from John Marshall Law School.
The Company's other directors, each of whom the Company expects to continue
to serve as a director following the Meeting, are as follows:
Class of 1999
MORLEY KOFFMAN, age 68, has been a director of the Company since December
1991 and was Chairman of the Board until January 1998. Mr. Koffman was a member
of the law firm of Freeman & Company of Vancouver, British Columbia until March
31, 1993. From April 1, 1993 until October 31, 1997, he was a member of Koffman
Birnie & Kalef. Effective November 1, 1997, he became a member of Koffman Kalef.
Mr. Koffman is a director of Ainsworth Lumber Co. Ltd., Nevis Ltd., Lions Gate
Entertainment Corporation and Anthem Properties Corporation.
ANTHONY J. PAONI, age 53, has been a director of the Company since July
1997. Mr. Paoni has been a professor at the J. L. Kellogg Graduate School of
Management since September 1996. Prior to that he was an officer of several
private software development companies.
3
<PAGE> 7
JOHN W. PUTH, age 69, has been a director of the Company since January
1992. Mr. Puth has been President of J. W. Puth Associates since December 1987,
and Chairman of VJ Growers since 1996. Mr. Puth is a director of A. M. Castle &
Co., Allied Products Co., Brockway Standard Holdings Corporation, L. B. Foster
Inc., Lindberg Corporation, System Software Associates, Inc. and several private
manufacturing companies.
Class of 2000
ROBERT V. DELANEY, age 62, has been a director of the Company since
December 1991. Mr. Delaney has been an Executive Vice President of Cass
Information Systems since January 1990.
ROBERT P. NEUSCHEL, age 79, has been a director of the Company since
December 1991. Since 1978, Professor Neuschel has been Professor of Management
at the J. L. Kellogg Graduate School of Management, where he is currently
Professor of Corporate Governance and was Associate Dean from 1992 until 1996
for Advisory Board Relations.
JAMES G. CONNELLY III, age 52, was appointed as the Company's President and
Chief Operating Officer on January 5, 1998 and has been a director of the
Company since January 1998. He was President and Chief Operating Officer of
Caremark International, Inc. from 1992 until 1997. Prior to that, he was an
officer of Baxter International, Inc. Mr. Connelly is a director of Boise
Cascade Office Products Corporation.
COMMITTEES AND ATTENDANCE
The Board of Directors met six times during fiscal year 1997. The Audit
Committee, currently consisting of directors Neil A. Springer (Chairman), Morley
Koffman, Robert V. Delaney, and Robert P. Neuschel met once during fiscal 1997.
The Audit Committee oversees the activities of the Company's independent
auditors. The Compensation Committee, currently consisting of directors John W.
Puth (Chairman), Morley Koffman, William N. Weaver, Jr. and Robert P. Neuschel
met twice during fiscal 1997. The Compensation Committee reviews and makes
recommendations to the Board of Directors with regard to the salaries, incentive
compensation and related benefits of corporate officers and other employees.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company is paid for his
services as a director $20,000 per annum, plus $1,000 for each meeting of the
Board of Directors he attends. The chairman of the Audit Committee and the
chairman of the Compensation Committee receive an additional annual payment of
$3,500 and $2,500, respectively. Members of the Audit Committee (other than Mr.
Koffman) are paid $1,000 for each meeting they attend if the meeting is not held
on the same day as a meeting of the Board of Directors. Members of the
Compensation Committee (other than Mr. Koffman) are paid $750 for each meeting
they attend if the meeting is not held on the same day as a meeting of the Board
of Directors. Members of the committees who attend committee meetings that are
held on the same day as meetings of the Board of Directors receive a $250
payment for each such meeting they attend. Directors who are employees of the
Company are not separately compensated for their services as a director. For his
services as Chairman of the Board of Directors, Mr. Koffman was paid (in
addition to the $20,000 annual payment set forth above) $30,000 in 1997.
4
<PAGE> 8
MANAGEMENT COMPENSATION
The following table discloses the compensation awarded by the Company for
services rendered during the Company's last three fiscal years to the chief
executive officer and to the other named executive officers as of the end of
1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------- -----------------------
SECURITIES
RESTRICTED UNDERLYING
NAME AND PRINCIPAL STOCK OPTIONS ALL OTHER
POSITION YEAR SALARY ($) BONUS ($)(1) AWARDS ($) (#) COMPENSATION ($)
------------------ ---- ---------- ------------ ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
J. Campbell Carruth.............. 1997 600,000 500,000 0 100,000 5,575(3)
Chairman of the Board & 1996 600,000 300,000 0 100,000 5,250(3)
Chief Executive Officer 1995 600,000 0 0 0 5,250(3)
James G. Connelly III............ 1997 12,944(5) 0 0 200,000 0
President and Chief
Operating Officer
Robert V. Fasso(6)............... 1997 239,520 274,520 0 25,000 6,293(4)
President-Regional Carrier
Group
Christopher L. Ellis............. 1997 270,000 108,000 0 35,000 40,295(4)
Senior Vice President, 1996 260,000 62,400 48,000(2) 12,500 39,953(4)
Finance & Chief Financial
Officer 1995 260,000 62,400 0 0 39,710(4)
</TABLE>
- ---------------
(1) Amounts shown include cash compensation earned and received by executive
officers as well as amounts earned but deferred at the election of those
officers.
(2) The shares represented by the restricted stock award are subject to a
forfeiture restriction if Mr. Ellis terminates employment with the Company.
This restriction lapses with respect to 25% of the shares on each of the
first four anniversary dates of the award. Dividends are paid on all
restricted shares to the same extent as any other shares of the Company's
common stock. The number of restricted shares for Mr. Ellis held at the end
of fiscal year 1997 was 2,000 and the value of such shares at the end of the
last fiscal year was $66,750.
(3) Consists in all three years of an employer contribution to Mr. Carruth's
401(k) plan maintained by the Company.
(4) Consists in all three years of an employer contribution to Mr. Ellis' 401(k)
plan maintained by the Company and the Company's payment of $34,720 each
year in split-dollar life insurance premiums on Mr. Ellis' behalf. Consists
of an employer contribution to Mr. Fasso's 401(k) plan maintained by the
Company and the payment by a subsidiary of the Company of $3,918 in whole
life insurance premiums on Mr. Fasso's behalf.
(5) Consists only of Mr. Connelly's compensation from December 19, 1997, the
date on which he was hired by the Company.
(6) Mr. Fasso was named an executive officer of the Company on September 12,
1997.
EMPLOYMENT CONTRACTS
The Company has entered into an agreement with Mr. Connelly. Under his
agreement, Mr. Connelly is entitled to receive a base salary of $500,000 as well
as a guaranteed 1998 bonus of 40% of base salary, with the opportunity to earn
up to a maximum of 75% of base salary in accordance with a formula based on the
consolidated operating ratio of the Company. In addition, under the terms of the
agreement, in the event there is a change of control during the first year of
Mr. Connelly's employment and such change in control results in
5
<PAGE> 9
his termination, or, if he is terminated for reasons other than for "cause"
there would be a settlement payment equal to two years of his base salary.
The Company has also entered into employment agreements with Messrs. Ellis
and Fasso. Under his employment agreement, Mr. Ellis is entitled to receive at a
minimum, a base salary of $200,000 as well as a discretionary annual bonus that
is not guaranteed. Under his employment agreement, Mr. Fasso is entitled to
receive at a minimum, a base salary of $235,000 as well as a discretionary
annual bonus that is not guaranteed. Under the terms of each agreement, in the
event that the individual's employment is terminated by the Company for any
reason other than death, disability, retirement or cause, that individual is
entitled to either two years notice or, if the Company wishes to terminate his
employment without such notice, to be paid his then prevailing salary for a two
year period following the termination of his employment.
OPTION GRANTS FOR FISCAL 1997
The following table provides further information on individual stock option
grants made for fiscal 1997 to the named executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES
SHARES % OF TOTAL OF STOCK PRICE
UNDERLYING OPTIONS APPRECIATION
OPTIONS GRANTED TO EXERCISE FOR OPTION TERM(1)
GRANTED EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME (#) FISCAL 1997 ($/SH.) DATE 5% ($) 10% ($)
---- ---------- ------------ -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
J. Campbell Carruth............. 100,000(2) 18.57 31.813 12/12/07 2,000,720 5,070,171
James G. Connelly III........... 200,000(2) 37.14 30.50 12/19/07 3,836,290 11,021,826
Christopher L. Ellis............ 35,000(2) 6.50 30.50 12/19/07 671,351 1,928,820
Robert V. Fasso................. 25,000(2) 4.64 30.50 12/19/07 479,536 1,377,728
</TABLE>
- ---------------
(1) The potential realizable value columns of the table illustrate values that
might be realized upon exercise of the options immediately prior to their
expiration, assuming the Company's Common Stock appreciates at the
compounded rates specified over the term of the options. These numbers do
not take into account provisions of certain options providing for
termination of the option following termination of employment or
nontransferability of the options and do not make any provision for taxes
associated with exercise. Because actual gains will depend, among other
things, on future performance of the Common Stock, the amount reflected in
this table may not necessarily be achieved.
(2) Options are at the market price on the grant date and vest 20% per year over
5 years.
AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND JANUARY 3, 1998 OPTION VALUES
The following table provides information on the value of the named
executive officers' unexercised stock options as of January 3, 1998.
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS AT OPTIONS AT
ON VALUE JANUARY 3, 1998 (#) JANUARY 3, 1998 ($)(1)
EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Campbell Carruth............ 75,000 1,121,796 25,000 175,000 378,125 1,003,075
James G. Connelly III.......... 0 0 0 200,000 0 575,000
Christopher L. Ellis........... 10,000 145,000 42,000 48,000 815,188 293,250
Robert V. Fasso................ 0 0 25,000 75,000 300,625 730,625
</TABLE>
- ---------------
(1) Based on the fair market value of $33.375 per share as of January 2, 1998
(the last trading day before fiscal year close), the closing sale price of
the Company's common stock on that date as reported by the NASDAQ Stock
Market.
6
<PAGE> 10
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company monitors salaries paid to comparably situated senior management
at its competitors and sets salaries for its executive officers accordingly.
These competitors include the eight publicly traded less-than-truckload (LTL)
trucking companies included in the "Peer Group" used for the stock performance
graph below (see page 8) as well as others. Base salaries are set to ensure that
the Company is competitively positioned to retain and attract outstanding senior
management. Based on available information, the Company believes that total
executive compensation is near or slightly above the median of these
competitors' total compensation.
Compensation of Executive Officers Generally
In general, the Company sets initial base salaries for its executive
officers in light of this competitive analysis to ensure that the Company is
competitively positioned to retain and attract outstanding senior management.
Subsequent raises in base salary are determined in light of experience,
individual job performance and the Company's overall performance.
Senior managers, including the executive officers, also are eligible for an
annual bonus. Executive officers of the Company, other than Mr. Carruth, are
eligible for a bonus depending on the Company's profit margins as well as to the
extent to which they achieve individualized goals tied to their specific areas
of responsibility. The Company operates through a number of distinct operating
subsidiaries. The bonus plan for the chief executive officer of each subsidiary
depends on that subsidiary's profit margins as well as to the extent to which
they achieve individualized goals tied to their specific areas of
responsibility. The bonus for executive officers of the Company, other than Mr.
Carruth, and for the chief executive officer of each subsidiary generally varies
from 50% to 100% of base salary depending on the individual plan. Mr. Fasso
received a one-time special bonus of $35,000 for assuming added responsibilities
in his position as President-Regional Carrier Group.
To encourage management to maximize stockholder value over the long term,
the Company grants to selected senior managers an equity interest in the Company
in the form of restricted stock awards or stock options granted pursuant to its
stock option plan. The options are granted with an exercise price equal to the
market price at the time of grant, and become exercisable generally in stages
over a five year period. The restricted stock awards vest as to 25% of the
shares on each anniversary date of the award. Both the stock options and
restricted stock awards provide senior managers with an incentive to remain with
the Company over a substantial period of time and closely ally the long term
interests of management with those of the stockholders.
Compensation of the Chief Executive Officer
Mr. Carruth's salary for 1997 included in the Summary Compensation Table
was set by the Compensation Committee and memorialized in a summary memo. The
Compensation Committee recommended that Mr. Carruth, as Chief Executive Officer,
be awarded a bonus of $500,000 for 1997. The Committee's principal reason for
doing so was the Company's strong financial performance in 1997, a year in which
the Company had record earnings.
The Compensation Committee endorses the position that stock ownership by
management and stock-based performance compensation arrangements are beneficial
in aligning management's and shareholders' interest in enhancing shareholder
value. In determining the size of Mr. Carruth's stock option grant in December
1997, the Committee considered the Company's financial performance in 1997 which
was very strong compared to the Company's peer group, the Company's successful
equity offering in January 1997 and Mr. Carruth's outstanding leadership. It is
the Committee's view that Mr. Carruth's total 1997 compensation package was
based on an appropriate balance of (1) the Company's performance in 1997, (2)
his own performance level and (3) increases in the market value of the Company's
common stock in 1997.
Changes made to the Internal Revenue Code in 1993 limit the Company's
ability to deduct, for federal income tax purposes, certain compensation in
excess of $1 million per year paid to individuals named in the Summary
Compensation Table. This limitation was effective beginning in 1994. Based on
its review of the
7
<PAGE> 11
facts and circumstances, the Committee believes that the limitation will have no
effect on the Company in 1997. Although the Committee will periodically review
the advisability of making changes in compensation plans to reflect government
mandated policies, it will not do so unless it feels that such changes are in
the best interests of the Company or its stockholders.
COMPENSATION COMMITTEE
John W. Puth, Chairman
Morley Koffman
Robert P. Neuschel
William N. Weaver, Jr.
COMPARISON OF TOTAL CUMULATIVE SHAREHOLDER RETURNS
The following graph compares the cumulative total stockholder return on the
Company's Common Stock for the last five years with the cumulative total return
of The NASDAQ Stock Market and an index prepared for the Company of the stock
price performance on a cumulative total return basis of 8 less-than-truckload
general commodities motor carriers whose stock is currently publicly traded (the
"Peer Group Index"). The graph assumes that $100 was invested on January 1, 1993
in the Company's common stock, the stock of the companies comprising The NASDAQ
Stock Market and the Peer Group companies (allocated among the Peer Group
companies pro rata according to their relative market capitalizations). Note:
The Company's stock price performance shown below is not necessarily indicative
of future price performance.
COMPARISON FOR THE PERIOD JANUARY 1, 1993 THROUGH DECEMBER 31, 1997 OF THE
CUMULATIVE TOTAL RETURNS OF USFREIGHTWAYS CORPORATION COMMON STOCK, THE
NASDAQ STOCK MARKET, AND THE "PEER GROUP" INDEX.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) USFREIGHTWAYS NASDAQ INDEX PEER GROUP
<S> <C> <C> <C>
12/31/92 100.000 100.000 100.000
1/29/93 108.333 102.847 103.040
02/26/93 95.238 99.010 100.624
03/31/93 119.166 101.876 95.880
04/30/93 117.369 97.528 92.448
05/28/93 126.950 103.354 89.487
06/30/93 134.852 103.832 89.331
07/30/93 136.056 103.954 93.099
08/31/93 161.340 109.327 96.504
09/30/93 168.430 112.583 100.261
10/29/93 162.996 115.114 111.375
11/30/93 177.485 111.682 108.431
12/31/93 196.319 114.796 119.589
01/31/94 179.959 118.281 123.317
02/28/94 209.043 117.177 126.584
03/31/94 177.839 109.971 119.229
04/29/94 171.455 108.544 115.439
05/31/94 156.863 108.809 112.020
06/30/94 168.496 104.830 109.926
07/29/94 181.316 106.980 110.533
08/31/94 177.653 113.800 118.838
09/30/94 189.405 113.509 113.880
10/31/94 187.566 115.740 114.851
11/30/94 182.969 111.900 104.713
12/30/94 189.227 112.214 114.378
01/31/95 197.534 112.843 109.692
02/28/95 203.072 118.811 117.588
03/31/95 176.142 122.334 111.299
04/28/95 174.288 126.186 112.427
05/31/95 168.726 129.442 106.323
06/30/95 148.070 139.932 101.980
07/31/95 163.902 150.218 105.904
08/31/95 154.589 153.262 104.577
09/29/95 141.347 156.787 97.593
10/31/95 134.794 155.888 88.616
11/30/95 147.899 159.549 95.065
12/29/95 151.393 158.699 90.185
01/31/96 139.169 159.482 78.122
02/29/96 156.095 165.552 84.569
03/29/96 171.827 166.101 90.205
04/30/96 170.883 179.882 93.377
05/31/96 164.275 188.141 89.137
06/28/96 147.972 179.660 80.560
07/31/96 134.218 163.658 76.775
08/30/96 157.458 172.828 85.053
09/30/96 156.224 186.048 84.261
10/31/96 166.703 183.993 84.522
11/29/96 197.662 195.367 88.066
12/31/96 209.855 195.192 93.064
01/31/97 194.080 209.064 101.303
02/28/97 184.519 197.505 97.574
03/31/97 198.646 184.612 108.343
04/30/97 207.283 190.384 111.643
05/30/97 186.171 211.969 119.015
06/30/97 199.356 218.452 131.938
07/31/97 239.324 241.510 140.661
08/29/97 231.137 241.142 150.618
09/30/97 259.799 255.404 172.595
10/31/97 250.141 242.129 161.323
11/28/97 237.586 243.326 155.637
12/31/97 251.852 239.527 136.953
</TABLE>
- ---------------
(1) The "Peer Group" Index consists of the following eight publicly traded
companies, whose primary business is as a less-than-truckload general
commodities motor carrier: Arkansas Best Corporation; American Freightways
Corporation; Arnold Industries Inc.; Consolidated Freightways Corporation;
CNF Transportation, Inc.; Old Dominion Freight Line, Inc.; Roadway Express,
Inc.; and Yellow Corporation.
8
<PAGE> 12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
William N. Weaver, Jr., a director, is a member of the law firm of Sachnoff
& Weaver, Ltd., an Illinois professional corporation. Sachnoff & Weaver, Ltd.
has acted and continues to act as outside counsel to the Company with regard to
certain matters and has received legal fees for services rendered in connection
therewith.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
John W. Puth, Morley Koffman, Robert P. Neuschel and William N. Weaver,
Jr., none of whom are employees of the Company served on the Compensation
Committee. Mr. Weaver served as Assistant Secretary of the Company in a
non-employee capacity. There are no committee interlocks or insider (employee)
participation.
INDEPENDENT PUBLIC ACCOUNTANTS
By the selection of the Company's management and its Board of Directors,
the accounting firm of Arthur Andersen LLP, certified public accountants, serves
the Company as its independent public accountants. One or more representatives
of Arthur Andersen LLP are expected to be present at the Meeting, with the
opportunity to make a statement if they desire to do so, and to be available to
respond to appropriate questions.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and NASDAQ. Officers, directors and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such forms received by it, the
Company believes that, during fiscal year 1997, all filing requirements
applicable to its officers, directors, and greater than ten-percent beneficial
owners were complied with except that one report, covering one transaction
involving the disposition of the Company's Common Stock, was inadvertently filed
late by Mr. Robert P. Neuschel, a director of the Company.
ANNUAL REPORT
A copy of the Company's Annual Report to Stockholders accompanies this
Proxy Statement. The Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year ended January 3, 1998, as filed with
the Commission, is available without charge to any stockholder upon written
request to Christopher L. Ellis, Senior Vice President, Finance and Chief
Financial Officer, USFreightways Corporation, 9700 Higgins Road, Suite 570,
Rosemont, Illinois 60018. The exhibits filed with the Form 10-K are not
included; however, copies of such exhibits will be furnished, if requested, upon
payment of the Company's reasonable expenses in furnishing those materials.
STOCKHOLDER PROPOSALS
Stockholder proposals submitted for evaluation as to inclusion in the proxy
materials for the Company's next annual meeting of stockholders must be received
by the Company not later than November 17, 1998, at the Company's principal
executive offices at 9700 Higgins Road, Suite 570, Rosemont, Illinois 60018.
9
<PAGE> 13
OTHER MATTERS
Management is not aware of any other matters to be presented for action at
the Meeting. If any other matters are properly brought before the Meeting, it is
the intention of the persons named as proxies in the accompanying form of proxy
to vote the shares represented thereby in accordance with their best judgment.
For the Board of Directors
RICHARD C. PAGANO
Secretary
Rosemont, Illinois
March 25, 1998
10
<PAGE> 14
PROXY/VOTING INSTRUCTION CARD
USFREIGHTWAYS CORPORATION
9700 W. HIGGINS, SUITE 570 - ROSEMONT, ILLINOIS 60018
COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING ON MAY 1, 1998.
The undersigned appoints J. Campbell Carruth and Christopher L. Ellis as
proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of Common
Stock of USFreightways Corporation held of record by the undersigned on March
10, 1998, at the Annual Meeting of Stockholders to be held on May 1, 1998 or
any adjournment thereof, and in their discretion, the proxies are authorized to
vote upon such other business as may properly come before the meeting.
PLEASE MARK THIS PROXY AS INDICATED ON THE REVERSE SIDE TO VOTE ON ANY ITEM.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED.
USFREIGHTWAYS CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY
[ ]
<TABLE>
<CAPTION>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE ELECTION OF DIRECTORS
<S><C>
FOR WITHHELD FOR ALL
ALL ALL EXCEPT
1. Election of Directors / / / / / /
NOMINEES: J. Campbell Carruth, Neil A. Springer and
William N. Weaver, Jr.
- -------------------------------------------------------
(Except nominee(s) written above.)
This Proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder(s).
DATE:
- ------------------------ ----------------------- -------------------
SIGNATURE(S)
NOTE: PLease sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. The signer hereby revokes all proxies
heretofore given by the signer to vote at said meeting or any adjournment
thereof.
</TABLE>
* FOLD AND DETACH HERE *
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING THE ENCLOSED
ENVELOPE.
[USFREIGHTWAYS LOGO]
